The government has repaid an accumulated $1.39 billion in debt service payments from 1993 to the end of last year, of which last year alone it repaid about $265.6 million, said the Cambodia Public Debt Statistical Bulletin released on Tuesday.
The bulletin – the seventh edition by the Ministry of Economy and Finance – said Cambodia signed concessional loan agreements with development partners with a total value of $11.39 billion from 1993 to the end of last year, but the government has disbursed $7.29 billion.
As of the the end of 2018, the government has a total outstanding public debt of $7.02 billion, 99.9 per cent of which is external public debt.
The bulletin, which was signed by Minister of Economy and Finance Aun Pornmoniroth, revealed that for last year all four key debt indicators – such as the debt-to-GDP and debt-to-income ratios – are well below their indicative thresholds.
“Based on the international best practice, therefore, Cambodia’s public debt remains ‘sustainable’ and ‘low risk’ of debt distress,” the bulletin said.
Debt principally from China
By the end of last year, the national debt had been driven largely through bilateral and multilateral concessional loans, principally from China. The Kingdom owes China nearly half of its total debt – roughly $3.4 billion.
A draft of the 2019 National Budget released late last year said the government plans to borrow an additional 1.4 billion in Special Drawing Rights (SDR), equal to $1.94 billion, to meet its planned budget for this year.
Centre for Policy Studies director Chan Sophal on Wednesday echoed the bulletin’s comments that Cambodia’s current level of outstanding debt is manageable, given the Kingdom’s country status.
He said the government manages its public debt well and is actually able to borrow more as the country currently urgently needs roads, bridges and irrigation systems, as long as the loans are used responsibly.
“The Cambodian government is highly cautious in managing debt and in fact, the country is able to borrow more to develop infrastructure,” he said.
“The important thing is to ensure using the loan in the right direction and to use it responsibly,” Sophal said.
Emerging Markets Consulting senior consultant Ngeth Chou on Wednesday said Cambodia’s debt-to-GDP ratio, which is about 30 per cent, remains low risk. He said other countries in the region have a bigger debt-to-GDP ratio – above 60 per cent and some higher than 100 per cent.
He said the common impromptu method of measuring the economy by dividing the total outstanding debt by the total population is incorrect and not used in technical analyses.
“Cambodia’s debt levels are not in crisis or at risk yet. The important thing is if we use loans for public investment with transparency."
“If we think at the micro-level or of family businesses, it is not that bad just to borrow money. What’s important is that we borrow for the right purpose, for example, to generate income that allows us to pay it back,” Ngeth Chou said.